I am a bit fixated on this statement:
“The company has many design wins and more than five hundred commercial prospects for its solutions.”
“Many design wins” - The former CEO Mr. Dinardo spoke of design wins as being part of the process that Brainchip had to work through on the pathway to signing a commercial engagement.
“more than five hundred commercial prospects for its solutions” I recall Acting CEO Peter van der Made speaking about saturating the market and an explosion of sales. These statements were made in the six months leading up to the publication of this article.
On balance the terminology used and the circumstances leading up to it being made in my opinion gives it some significant credibility.
My opinion only DYOR
FF
AKIDA BALLISTA
Further to my fixation some might recall a few weeks ago I posted a Harvard research paper which had looked at the conversion rate of customer engagements in the semiconductor space that came up with 35%.
This number, 35%, was intended to be a conservative conversion rate and involved various assumptions such as an equal market place where all competitors had a similar product offering and price and service were the only variables.
If we take the 500 commercial prospects and assume they have just walked in the front door and sat down at the desk of Rob Telson and AKIDA is the same as every other product offering in the market based on this Harvard research we can expect Rob Telson will convert 35 out of every 100 customers to a commercial engagement or 175 customers out of the 500 will sign on the dotted line.
If we add back in that AKIDA has no competition and a two to three year lead and strong market validation thanks to ARM, Edge Impulse, NASA, DARPA and Mercedes Benz then the conversion rate of 35% is obviously very conservative.
Every 5% adds an extra 25 customers signing on the dotted line. So a 40% conversion rate means 200 customers signing up.
If we use the Renesas licence fee of about 1 million dollars this instantly produces 200 million dollars with a further 200 royalty streams once the 200 customer products come to market.
Once again this is a conservative view as MegaChips licence fee and engineering was about 2 million dollars.
Of course we do not have confirmation of the 500 commercial prospects referred to in this article so the above may be based on entirely inaccurate information.
Can we test the feasibility of 500 customer engagements being realistic by some other known facts.
Well we do know that Edge Impulse supports 33,000 engineers each working on projects.
If 10 percent pick up on AKIDA that would be 3,300 engineers working to develop products to take commercial and if only ten percent of those products work their way through to market that would be 330 commercial products in the market containing AKIDA.
The idea of 500 commercial prospects based on this can be seen as not beyond industry scale.
The question becomes then is it likely that the ARM sales team assembled by Rob Telson could have lined up 500 commercial prospects in the 12 month period from the release of the AKD1000 engineering samples in October, 2020.
I think it is realistic particularly when you take into account that in mid 2020 the former CEO Mr. Dinardo stated that Brainchip had ‘well north of 100 NDA customer engagements’.
So to reach 500 Rob Telson and his team already had a flying start of 100 to 150 already onboard.
My opinion only so DYOR
FF
AKIDA BALLISTA